Pennsylvania House breaks off debate on taxing Marcellus Shale gas

Posted: September 29, 2010

HARRISBURG - The Pennsylvania House broke off debate on taxing Marcellus Shale natural gas with Democratic leaders vowing to secure the votes for final passage Wednesday.

House Democrats - with a late assist from a Southeastern Pennsylvania Republican - appeared poised to push through a tax on gas extraction but had to delay the vote for 24 hours because of House rules.

House Majority Leader Todd Eachus (D., Carbon) said a "great compromise" with Republicans should secure enough votes to send the bill to the Senate.

"I'm hopeful we can have 102 votes we need," he said. "We will work on that tonight and tomorrow."

If the measure passes, it would position the legislation for negotiation with Senate Republican leaders and Gov. Rendell as early as this week.

After more than five hours of debate, the House approved an amendment offered by Rep. Kate Harper (R., Montgomery) that would set aside 60 percent of revenue from the tax for local governments and the environment and 40 percent for the general fund.

The General Assembly has wrestled for several years with taxing the lucrative Marcellus Shale reserve, which underlies most of the state.

Newly developed deep-well technology has allowed gas companies to reach the deposits, setting off a drilling boom that has brought thousands of jobs and millions of dollars in investment, but also increased environmental concerns about contamination to the water supply.

Senate Republicans, who control that chamber, had pronounced an earlier bill that moved out of committee Monday dead on arrival because of what they call an unreasonably high tax rate on the industry.

Eachus said the new bill offered the opportunity for Pennsylvania to "face its most serious environmental challenge" since coal mining began.

Rendell said he would support the House Democrats' plan because the tax - which would generate $300 million - was close to what he was seeking.

"We hope this will be a starting point for negotiations," said Rendell's spokesman, Gary Tuma.

The General Assembly has little time to reach a deal with the Senate, which meets on only four days before the end of the year. The House has scheduled additional sessions after the Nov. 2 election.

The legislation would impose a tax of 39 cents per 1,000 cubic feet of natural gas extracted, roughly 10 percent based on current gas prices, a figure the industry and House Republicans said would be the highest in the nation.

During a heated floor debate, House Republicans railed against the "job-crushing" tax rate and the wasteful windfall they said would be funneled into the state general fund to support "big government."

"Shale has helped the economy," said Rep. Matt Baker, a Republican from Bradford County, the heart of the shale-drilling region. He said the tax would put Pennsylvania at an economic disadvantage and have "a chilling effect on capital development" just as the economy is recovering from the recession.

Democrats hailed the legislation as a historic effort to compel "big gas" to pay its fair share toward protecting the state's water supply, repairing roads, and filling the deepening budget hole next year.

"This tax is long overdue," said Rep. Camille George (D., Clearfield). "Marcellus Shale didn't come in just this year, it's been here four years," and the state has lost millions in tax revenue, he said.

The bill also would establish a "job-creation tax credit," allowing gas-drilling companies to claim up to $1,000 in tax relief for each job created.

During debate, Rep. Bryan Lentz (D. Delaware) said those voting against the bill would be doing the "bidding of industry, much like the coal industry a century ago."


Contact staff writer Amy Worden at 717-78-2584 or aworden@phillynews.com.

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